U.K. Economy Regains Pre-Recession Peak, Niesr Says

An employee applies adhesive to the metal door frame of a luxury Jaguar automobile, produced by Jaguar Land Rover Plc, a unit of Tata Motors Ltd., at the company's assembly plant in Castle Bromwich. U.K. Factory output has now risen for five consecutive months, the longest streak of gains since 2010. Photographer: Simon Dawson/Bloomberg

June 10 (Bloomberg) -- Britain’s strengthening recovery has
probably pushed the economy back above its pre-crisis level,
ending the longest period of below-peak output in a century.

The National Institute of Economic and Social Research
estimates gross domestic product rose 0.9 percent in the three
months through May. That puts it about 0.2 percent above where
it was in January 2008, Niesr said in a monthly report today.

Britain is the last of the Group of Seven nations bar Italy
to regain its pre-recession level. The development may add to
the debate among Bank of England officials about when to raise
interest rates from a record low as they begin to diverge on the
timing of policy tightening.

Niesr published its estimate after data today showed U.K.
industrial production rose for a third month in April, driving
the annual increase to 3 percent, the most since 2011.

The gain would have been even bigger were it not for a
sharp drop in electricity and gas output, which was down 11.5
percent from a year earlier. That was partly related to warmer
weather this year and knocked about 1 percentage point off
industrial production.

Today’s data also showed manufacturing rose 0.4 percent in
April from March. That was a fifth consecutive increase, the
longest streak of gains since 2010.

“This is a solid start to the second quarter,” said David
Tinsley, an economist at BNP Paribas SA in London. “If
manufacturing production went sideways in May and June it would
still be up 1.1 percent over the quarter. And all survey
evidence suggests a better performance than that is possible.”

Winning Streak

In the three months through April, production rose 1.1
percent compared with the previous three months. That was the
most since June 2010 and marked a 15th consecutive advance.
While the economy has strengthened over the past year,
industrial output remains 11.3 percent below where it was in the
first quarter of 2008, while manufacturing is 7 percent smaller.

The U.K. Treasury said the data are “further evidence that
the government’s long-term economic plan is working.”

“The job is not done, but the greatest risk to the
recovery would be abandoning the plan that’s delivering a
brighter economic future for Britain,” it said in a statement.